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Market Report: Compact Plant No signs of slowdown The compact plant market continues to grow strongly. EHN analyses the reasons behind the on-going boom and discusses future trends. There is an overwhelming consensus among manufacturers that 2007 will comfortably see yet another record number of mini excavators sold in the UK and Eire, with forecasts of approximately 17,000 machines. This compares with around 15,000 in 2006 and maintains the astonishing success of this market segment in recent years. It has also resulted in continued growth in sales of related machinery, such as dumpers and carriers, which are often hired out with mini excavators. “All the hirers we speak to report high equipment utilisation levels,” says Robert Brown, Managing Director of Ammann Equipment. “Business understandably slackened during the summer flooding, but afterwards contractors were even busier than before catching up. There is certainly a lot of construction activity currently, not just with public funded projects like road building, but also private sector work such as house building, which shows no sign at all of a downturn. And this is without any appreciable ‘Olympic effect’; although such infrastructure projects will eventually create demand, it is currently for considerably larger equipment, and compact plant will be required in the later stages. Demand for all sizes of mini “We are experiencing demand for all sizes of mini excavator, with 1.5 tonne machines still representing the largest group in terms of sales. A lot of construction work is taking place on urban ‘brownfield’ sites where space is tight, and this has created demand for 5-8 tonne machines instead of larger equipment. We also see a lot of tool and equipment hirers adding these to their fleets to meet customer requirements: some hirers whose biggest mini was 3 tonnes are adding 5 tonne machines, and those with 5 tonne units are buying 8 tonne ones. This again reflects the amount of construction activity there is.” Richard Harrison, Sales & Marketing Manager for Kubota (UK), reports a similar situation, with “demand for minis of all sizes. Sales of sub-1 tonne machines remain strong, and there has been particular growth in the 5-8 tonne category. The market is buoyant, and Kubota will have had another record sales year in 2007. Minis are increasingly recognised as a versatile alternative to the backhoe loader. Sales of machines of 1-1.5 tonnes to hirers are still high, as this is an ideal weight for towing on their existing trailers and vehicles, and customers find them flexible and easy to operate. I can see no reason why the upward pattern of demand should change in the future.” Business confidence Kubota and JCB remain market leaders in terms of sales, representing between them approximately 45% of machines sold in the UK. Tim Burnhope, Deputy Managing Director of JCB Sales, says the upward trend “has been driven by business confidence on the back of growth in the construction market in general, and housing and utilities in particular. More sub-1 tonne machines are being sold and are likely to account for 8% of the mini/midi market this year.” David Munns, Director, Compact Equipment for Volvo Construction Equipment, also sees demand rising for all sizes of mini excavator. “Construction activity remains high and the Government continues to highlight the lack of available housing to meet future needs. Even an economic downturn would not change that situation. Hirers report high utilisation levels, and contractors remain very busy.” He states that, like other manufacturers, Volvo has seen particular sales growth in the 5-8 tonne mini excavator segment, as their increasing power capability enables them to effectively replace larger, heavier machines. “Some hirers are also replacing machinery earlier so that they can offer newer equipment, and the strong residual value of machinery means there is a ready market for good, used plant in the UK and the rest of Europe.” Tony Tite, Sales Manager for Takeuchi Mfg UK, also believes that the market will remain robust. “The construction market is strong and recent interest rate rises mean that more contractors will find that hire represents a more economical alternative to outright purchase. In addition, more of the national hire groups are adding smaller machines to their fleets.” Zero tail swing sales increase All manufacturers EHN spoke to reported continued growth in sales of zero tail swing and reduced tail swing mini excavators. “The proportion of zero tail swing minis sold increases every year,” says Kubota’s Richard Harrison. “However, there is still strong demand for conventional minis, which are the machines that many users, and hirers, are familiar with.” In similar vein, Tony Tite estimates that Takeuchi’s zero tail swing sales have more than doubled in the past year. “Sales of 6 tonne and 8 tonne machines are particularly strong. Smaller models also sell well, but models below 3 tonnes typically have cabs with curved glass panels, to increase cabin space, and their higher replacement cost means some hirers still choose conventional machines.” Alongside its conventional models, Volvo offers short radius, rather than true zero tail swing, machines from 2.8 tonnes upwards. “We see no reason to introduce smaller short radius machines,” says David Munns. “Lighter minis still have to be strong and stable with sufficient power, as well as having good cabin space for the operator. There remain a high number of hirers who choose conventional minis, and users who seek machines that can accept the biggest buckets and longest arms for their weight.” However, Robert Brown reports that reduced and zero tail swing models are the most popular choice amongst Ammann’s customers. “Health & Safety considerations represent a key driver, with zero tail swing being chosen to reduce the risk of on-site accidents. Some hirers may question the extra cost, but that will be recouped quickly from extra business when customers realise the benefits.” “The demand for zero tail swing minis is still growing and now accounts for around 25% of the market,” states JCB’s Tim Burnhope. “Tool and equipment hirers are adding these units to their fleets, and zero tail swing clearly allows the operator to work in the tightest of spaces.” Strong sales of dumpers The rise and rise of mini excavator sales means, in turn, increased demand for related machinery. Adrian Hyde, Marketing Manager with Terex Compact Equipment, reports that “demand for our site dumpers is strong across all weight ranges, from 850kg upwards. Construction activity is strong, and even if people choose not to move house, they will improve their current home with extensions and conservatories. Smaller dumpers are ideal for this sort of project, being able to reach the rear of houses. Fitted with narrow tyres they can even go through doorways. We are supplying a lot of new hire businesses that have been started by people leaving larger companies to work for themselves, and that is another positive sign for the future.” Dumper
specialist
Thwaites
is
another
manufacturer
reporting
increased
sales
in
2007.
“Some
of
this
growth
is
because
we
have
broadened
our
range
in
recent
years,
with
new
1-tonne
machines,
for
example,
that
have
proved
very
popular
with
hirers,”
states
Sales
Director
Ian
Brown.
“However,
the
scale
of
construction
activity
means
there
is
demand
for
our
dumpers
across
the
board,
up
to
Mark Dutton, Field Sales Manager with Cautrac, the distributor of Yamaguchi and Morooka tracked carriers and dumpers, also reports strong hire demand from professionals such as small builders and landscapers. “As well as reducing manpower requirements, these machines offer greater control than wheelbarrows and allow more accurate placement of materials. They have become essential partners for mini excavators. They can also be used for moving awkward loads, such as double glazing panels and, even, spa baths. Hirers should think laterally about the kind of markets they can target with this kind of equipment.” Increasing proportion of tracked loader sales The market for skid steer and tracked loaders has also remained consistent, but in a less positive way, with annual sales staying around the 900-1,000 mark. Hugely popular in the US, the machines are still seeking widespread acceptance here. “It is a case of educating the user and changing the prevailing culture in this country,” contends Takeuchi’s Tony Tite. “The biggest selling point for these machines is their versatility, being able to be used as a trencher, a forklift, an excavator and for many other applications, on all kinds of terrain. Tracked machines represent an increasing proportion of the units sold, approximately 40%, and they offer better traction and greater pulling power. They can be used in construction, recycling, forestry and other industries, and smaller machines are ideal for hirers because they can be towed on a typical small plant trailer.” John Burton, Bobcat Compact Loaders’ Business Director for Europe, the Middle East and Asia, agrees that “there are very good opportunities in the UK market - if hirers are prepared to put effort behind the products. Hirers who understand and actively promote the loader concept do extremely well, and they recognise that skid steers and compact tracked loaders offer a significantly increased return on investment compared with mini excavators and telehandlers, particularly when hired with attachments.” • Executive Hire News › Archives › November 2007 › Market Report › No signs of slowdown
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